PostNL remains hopeful for government help with shrinking postal delivery

2024 was (for now) the last year that PostNL made a profit from delivering letters. "From this year onwards, mail delivery is structurally loss-making," said Pim Berendsen, financial director of PostNL and successor to outgoing CEO Herna Verhagen, on Monday during the presentation of the annual figures.

Berendsen was not just talking about the legally required delivery of urgent mail, the so-called universal postal service (UPD), because PostNL has been making losses on that for years. He was talking about total mail delivery. That will shrink by 8 to 10 percent in the coming year.

In 2024, PostNL still earned 3 million euros (before interest and tax) from delivering letters. In the distribution of parcels, the second and better performing part of PostNL, the company achieved a gross profit of 65 million.

Berendsen and Verhagen repeated on Monday that they need support from the government. Financially, for the next two years, and in terms of policy. The Postal Act should be amended: urgent mail should be delivered within 48 hours and no longer within 24 hours.

“We have been able to do it on our own for a long time,” says Berendsen. “But now it is time for the government to pick up the tab [of the legally required postal service].” PostNL announced on Friday that it has submitted an application to the government for compensation, a contribution to the costs of the universal postal service. PostNL wants 30 million for 2025 and 38 million for 2026.

On Friday morning, the Ministry of Economic Affairs responded negatively to that request. Verhagen did not see that as a rejection, she stated on Monday. "The minister said that commercial companies that perform a statutory service should not suffer losses as a result." She found that to be a positive message. She expects an official response from Economic Affairs this spring.

24-hour obligation urgent mail

The compensation of 68 million must cover the costs that PostNL incurs to deliver urgent mail within one day. If parliament extends that obligation to two or three days, profit is on the horizon for the postal branch, according to PostNL. If the government maintains the 24-hour obligation (and the cabinet does not provide compensation), then according to PostNL, postal delivery will sink into deep red figures from this year onwards.

In most Western European countries, mail is delivered within two (Germany, Belgium, Sweden) or three days (France, Italy, Denmark, Norway). According to PostNL, consumers would rather have the certainty that their mail will be delivered within two or three days than speed (which PostNL does not always achieve due to staff shortages and high absenteeism). Only the UK has the same regime as the Netherlands – the government there is also discussing adjusting the postal regulations.

Unfair competition

According to the management of PostNL, the company is experiencing unfair competition in the Netherlands from international competitors who do not have to follow such strict (and expensive) rules for the universal postal service in their home market as the Dutch postal company.

Rejecting customers who generate relatively little revenue is one of the measures that PostNL wants to take to achieve 'healthy' growth in parcels

PostNL achieved a turnover of 3.25 billion euros in 2024 (2023: 3.17 billion). The profit fell from 56 to 18 million euros. This was not only due to the loss-making postal delivery. With parcels, PostNL noticed that large customers (Dutch and especially international web shops) have started to take up a larger share of the number of parcels to be delivered. This means less profit per parcel for PostNL: large customers pay a lower parcel rate.

Financial director Pim Berendsen announced on Monday that he wants to increase parcel rates – even though he risks losing customers. “Sometimes you are better off without certain volumes from certain customers.” He is referring to companies for which PostNL delivers parcels that negotiate such large discounts on volumes of parcels to be delivered that the postal company makes little profit on that delivery.

PostNL expects the Dutch market for digital shopping (e-commerce) to grow by 4 to 5 percent this year; PostNL itself expects a volume increase of 1 to 3 percent.

The elimination of customers who yield relatively little is one of the measures that PostNL wants to take to grow 'healthily' in parcels. PostNL also wants to increase the number of parcel machines, among other things. expand. These are lockers in public places where PostNL deliverers put packages and where addressees can pick them up again at a time of their choosing.